National Bank Of Canada · TSX:NA
National Bank Of Canada — Scotia Capital Financials Summit 2004
22 slides from National Bank Of Canada's conference presentation, Sep 14, 2004
Slide 1: Scotia Capital Financials Summit 2004
Scotia Capital Financials Summit 2004 Réal Raymond President and CEO Toronto, September 14, 2004 Financial Objectives Well on Way to Being Matched Excellent positioning for year end 2004 Objectives Q3 04 YTD Growth in earnings per share 5% to 10% 7% 20% Return on common shareholders' equity 15% to 1
Slide 2: Change in Net Income; Loan Losses and Provisioning
Change in Net Income 9 MS 04 vs 9 MS 03 NBC Big 5 50% 30% 28.0 14.3 7.9 8.2 10% 4.4 2.9 -10% -30% -26.8 -50% -70% -78.3 -90% Net income Revenue Expense PCL 3 Loan Losses and Provisioning 9M04 9M03 NBC Big 5 NBC Big 5 Reported losses1 0.31% 0.12% 0.44% 0.54% Specific provisions1 0.35% 0.33% 0.45% 0.4
Slide 3: Sectoral Growth; Today's Agenda
Sectoral Growth 9 months 2004 Revenue Net Income 35% 33.3 30% 25% 20.1 20% 16.3 14.3 15% 12.8 9.8 10% 7.9 5% 4.0 0% Total P&C Wealth Mgmt Financial Markets 5 Today’s Agenda Current business and economic environment in Canada NA’s EPS drivers Bank valuation metrics 6 3
Slide 4: More Challenging Environment Ahead for Banks
More Challenging Environment Ahead for Banks Bottoming up in loan losses Slackening in personal credit growth Slower rebound in Wealth Management Tougher time for Financial Markets 7 Reversal of Monetary Conditions 10-year Treasury Bonds US Canada 7,0 6,5 6,0 5,5 5,0 4,5 4,0 3,5 3,0 00 01 02 03 04 8
Slide 5: Consumers' Debt; Tougher Market for Investors
Consumers’ Debt % of Disposable Income 110% 100% 90% 80% 70% 60% 50% 40% 70 73 76 79 82 85 88 91 94 97 00 03 9 Tougher Market for Investors Performance of equities vs bonds TSE Bond Total Universe 575 24500 555 22500 535 515 20500 495 18500 475 455 16500 435 415 14500 395 12500 375 00 01 02 03 04 10
Slide 6: Canada: Non Financial Businesses; The Outlook for EPS Growth
Canada: Non Financial Businesses 180 Internally-generated 160 funds * 140 120 100 Acquisition of 80 capital assets 60 40 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 * Undistributed profits and amortization 11 The Outlook for EPS Growth Revenue enhancement Expense control Risk management Activ
Slide 7: Revenue Growth; Dominant Position in Quebec
Revenue Growth 9ms04+2003 vs 9ms03+2002 NBC Big 5 30% 26.7 25.3 25% 20% 14.8 15% 9.5 10% 7.4 5.3 5.5 5% 1.3 0% Total P&C(1) Wealth Mgmt(1) Financial Markets (1) 4 banks excl. Scotia 13 Dominant Position in Quebec Our core market Being #1 or #2 in all markets open to us remains priority Marketshare a
Slide 8: Credit Card Receivables; Mutual Funds AUM
Credit Card Receivables Quebec NBC Canadian banks Foreign banks Banks 190 180 170 160 150 140 130 120 110 100 1999 2000 2001 2002 2003 Moving average 1999=100 15 Mutual Funds AUM Quebec NBC Other banks Desjardins Independants Total 145 135 125 115 105 95 85 99Q4 00Q4 01Q4 02Q4 03Q4 Moving average 19
Slide 9: Quebec Initiatives; National Bank Family of Funds
Business Development: Quebec Initiatives Wealth Management Goal of increasing clients’ share of wallet Deployment 280 financial planners in high volume branches More than 50 structured products created 17 National Bank Family of Funds Net sales 12 months Results: – 108,000 clients assigned to Growth
Slide 10: Wealth Management Revenues; P&C Insurance
Wealth Management $ Millions Revenus Net income before tax 750 225 725 200 700 175 Revenues NIBT 675 150 650 125 625 100 600 75 2003 Q2 Q3 Q4 2004 Q2 Q3 4 quarter moving average 19 Business Development: Quebec Initiatives P&C Insurance Direct insurance partnership with AXA continues to grow at 15% r
Slide 11: Niche Strategy of National Bank; Quarterly Revenues
Niche Strategy of National Bank Business Model Financial Markets Partnerships Altamira Network National Bank Financial 21 Quarterly Revenues Financial Markets, Millions $ Quarter Trend Average 4 quarters Growth trend 10% 300 275 250 225 200 175 150 125 00 01 02 03 04 22 11
Slide 12: Competitive Positioning; NBF Retail Outside Quebec
Competitive Positioning Equity Issues 4 NBF Net Underwriting ($billions) 10% NBF Market Share 9% 8% 3 7% 6% (In billions $) 2 5% 4% 3% 1 2% 1% 0 0% 2000 2001 2002 2003 YTD - July 2004 # of deals 113 162 196 225 148 Source: National Bank Financial database 23 NBF Retail Outside Quebec AUM Income 45%
Slide 13: AUA NBCN; Investment Banking Group
AUA NBCN Billions $ 40 35 30 25 20 15 10 Oct-00 Oct-01 Oct-02 Oct-03 Jul-04 25 Investment Banking Group New Issuance of Equities Corporate Equity Participation: July 1, 2003 – June 30, 2004 300 260 257 255 250 228 224 221 205 200 152 149 Number of Deals 150 139 100 50 0 CIBC NBF BMO TDSI Canaccord R
Slide 14: Partnerships – Key Business Development Strategy
Partnerships – Key Business Development Strategy Nov 2002 August 2003 Nov 2002 May 2002 Nov 2002 May 2001 Nov 2001 Jan 2001 Edward Jones 27 Business Development: Outside Quebec Partnerships $70 M of new loans each month 75,000 new accounts $850 M new loans represents 15% of non credit card personal
Slide 15: Revitalizing NBC Retail Operations; Altamira/Bank Connection
Revitalizing NBC Retail Operations West of Quebec Net Sales – July YTD (In millions) 2004 2003 Savings 136 39 Investment products 49 (1) Credit 130 (45) 29 Altamira/Bank Connection Branch distribution of Altamira funds Use of Altamira channel to distribute Bank products Leveraging Altamira brand nat
Slide 16: Efficiency Ratio; Risk Management
Efficiency Ratio Bank (%) NBC Big 5 67.0 66.6 66.5 66.0 65.9 65.7 65.5 65.3 65.0 64.9 64.7 64.5 64.0 63.5 9M-02 9M-03 9M-04 31 Risk Management Quality of assets 9MS 2004 Y/E 2003 NBC Big 5 NBC Big 5 Net non-performing1 -0.46% -0.28% -0.38% -0.19% Provisions for loan losses1 0.35% 0.33% 0.45% 0.46% G
Slide 17: Growth and Volatility; Capital Management
Growth and Volatility Financial Markets Revenue 25% 20% Volatility Individual Banks 15% Total NBC 10% BIG 5 5% -10% -5% 0% 5% 10% 15% Trend Growth 2000/04 33 Capital Management 34 17
Slide 18: Capital Efficiency; Capital Sources and Uses
Capital Efficiency BIS assets as a % of book (left scale) Revenues as % adjusted BIS assets 65% 7,4% 60% 6,8% 55% 6,2% 50% 5,6% 45% 5,0% 99 00 01 02 03 04 Adjusted BIS assets equal BIS assets plus 12.5x gross goodwill and intangibles from acquisitions 35 Capital Sources and Uses 2000-04, Millions $
Slide 19: Tier 1 Capital Ratio; P/E (12 Months Forward)
Tier 1 Capital Ratio NA Big 5 12% 11% 10% 9% 8% 7% 00 01 02 03 04 37 P/E (12 Months Forward) Banks TSE NA 25 23 21 19 17 15 13 11 9 7 5 96 97 98 99 00 01 02 03 04 IBES; 3 months average 38 19
Slide 20: P/E Discount; New Reality of Banking Industry
P/E Discount Banks vs TSX Banks/TSE Na/Banks NA vs Banks 60% 50% 40% 30% 20% 10% 0% 96 97 98 99 00 01 02 03 04 IBES; 3 months average 39 New Reality of Banking Industry Reduced impact of interest rate hikes Stronger balance sheet Better risk management tools Last loan loss cycle stemmed from tech bu
Slide 21: New Reality of Banking Industry; Q&A
New Reality of Banking Industry Reduced impact of interest rates hikes Stronger balance sheet Better risk management tools Last loan loss cycle stemmed from tech bubble Increased liquidity of the corporate sector In summary: Banks have been an excellent pick relative to the market during the past fi
Slide 22: Investor Relations Contact and Forward-Looking Statements
Investor Relations: 514.394.0296 www.nbc.ca/investorrelations investorrelations@nbc.ca • HIGHLIGHTS CAUTION REGARDING FORWARD-LOOKING STATEMENTS From time to time, National Bank of Canada makes written and oral forward-looking statements, included in this analyst and investor presentation, in other
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